There Should Be No Debate. Corporations Should Pay More Taxes.

Highly concentrated corporate wealth and economic inequality is a scourge on our city and society. Corporations should pay their fair share to support the public good. We’ve seen why this is necessary throughout history — over and over again. 

I had the privilege of working with late Chicago Teachers Union President Karen Lewis on her memoir. In it, Karen advocates for taxing the wealthy and corporations to help pay for public services and the public good, and says it is important to ask three questions when approaching such issues: ​“Who are the winners and losers?” ​“Who makes the rules to the game?” and ​“What stories do the winners tell the losers that keep them playing the game?” Too often, the wealthy and corporations have been the winners and working people have lost. Winners tell the losers many stories — one is that taxing corporations will tank the economy, killing jobs.

But this story rings hollow — and false.

My students have noted similarities between our current moment and the Gilded Age — the late-19^th century period characterized by high tariffs, labor exploitation, political corruption, anti-immigrant policies, anti-Blackness, industry-linked environmental catastrophes, and extreme economic inequality. Sound familiar? History doesn’t repeat itself, but it does echo and rhyme. 

In Gilded Age and Progressive Era Chicago, workers and Hull-House reformers exposed robber barons and organized for public services and government regulations to reign in economic inequality. The first federal corporate income tax was enacted in 1909 to regulate corporations and generate new revenue for public services. However, that 1% tax couldn’t remedy extreme inequality. Government needed to do more. And it did.

In 1935, President Franklin D. Roosevelt declared that ​“the people in the mass have inevitably helped to make large fortunes possible,” insisting that, ​“the duty rests upon the government to restrict such incomes by very high taxes.” During the New Deal era, higher corporate taxes funded a social safety net for Americans through Social Security, emergency loans, and cash assistance. These programs provided jobs for Chicagoans —expanding Lake Shore Drive, creating public art, and building new public schools and housing. Federal revenues also funded 1960s Great Society programs like Medicare, Medicaid, and food stamps. The welfare state’s social contract insisted that corporations pay taxes so the government could provide for, and protect, the public good. 

Unfortunately, that social contract disintegrated over the last 50 years. Since the 1960s, the top corporate tax rate was cut from 52% to 21%. Simultaneously, the federal government provided large-scale subsidies to corporations. Bucking this trend, in 1973, Chicago passed the corporate head tax. Although it generated progressive revenue to support the city budget and public services, it ended under Mayor Rahm Emanuel in 2014. Emanuel, who called the tax ​“a job killer,” embraced prevailing, bipartisan, ​“cut-to-grow” policies that rejected progressive revenue and cut taxes for corporations, while privatizing and slashing public services.

The Roosevelt Institute documented how these policies resulted in ​“increased relative tax burdens on low- and middle-income households​​.” Our society asks low- and middle-income families to take on a greater tax burden and receive diminished public services, while those with the ability to pay more – the wealthy and corporations – receive unprecedented tax breaks and see their stocks and profits soar.

We can see why people call today’s era the New Gilded Age. Today’s ultra-rich corporations and finance and tech bros are yesteryear’s robber barons. In our K-shaped economy, the wealthy thrive while everyone else struggles. In Illinois, a minimum-wage worker must work nearly 70 hours a week to afford a 1-bedroom apartment. One-third of Chicagoland residents can’t afford basic costs of living, including food. A Vorhees Center report shows the population of very rich and very poor Chicagoans has grown, while the middle class has shrunk.

We must, again, refute narratives that normalize this inequality. We cannot accept the stories that the winners tell us to keep us playing their game. There’s not convincing evidence that the corporate head tax is a ​“job-killer.” We deserve robustly funded public schools, libraries, parks, mental healthcare, community safety, and jobs for youth. And the ultra-rich and large corporations have the money to pay their fair share. 

As the Trump administration champions oligarchy and shreds the social safety net, we’re counting on our local and state elected officials to demand that corporations and the wealthy pay their share through progressive taxation, to fund and protect the public good and build thriving communities that benefit us all.